Canada Inflation Rate Rises Less than Anticipated

The annual inflation rate in Canada rose to 1.9% in August 2025, from 1.7% in July, but below the expected 2% and staying below the BoC’s 2% midpoint for the fifth straight month. The smaller year-on-year decline in gasoline prices (-12.7% vs -16.1% in July) was a key factor behind the pickup in headline inflation. Excluding gasoline, the CPI rose 2.4% in August, after increasing 2.5% in each of the previous three months. Food inflation ticked up (3.4% vs 3.3%), mainly due to higher prices of meat (7.2% vs 4.7%). Meanwhile, prices for shelter, representing almost 30% of the CPI basket, increased 2.6% in August, easing from 3% in July as both mortgage and rent costs moderated. On a monthly basis, the CPI edged down by 0.1%, after a 0.3% increase in July and compared with estimates of no change. The trimmed-mean core CPI, which is closely followed by the BoC for underlying inflation, eased to 3% in August, down from 3.1% in July, matching market forecasts.